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CoStar Group, Inc. Boosts Full-Year Outlook as Profits Soar

Accelerating revenue growth is a beautiful thing.

CoStar Group(NASDAQ:CSGP) reported first-quarter results on April 23. The provider of commercial real estate information, analytics, and online marketplaces is enjoying a powerful combination of accelerating sales growth and margin expansion, prompting it to raise its guidance for the year ahead.

CoStar Group results: The raw numbers

What happened with CoStar Group this quarter?

Multifamily revenue jumped 37% to $88 million, and 23% on an organic basis. CoStar Group continues to fortify its best-in-class apartment-listing network, with recent acquisition ForRent adding 3.7 million unique visitors to its monthly traffic. Combined with Apartments.com and its other rental sites, CoStar's network averaged 15.6 million unique monthly visitors in the first quarter -- representing a year-over-year an increase of 38% -- according to comScore.

"We are moving quickly to integrate the operations of the ForRent business with Apartments.com," founder and CEO Andrew Florance said in a press release. "With ForRent, we have expanded our industry-leading multifamily sales team to over 300 highly seasoned and trained sales professionals, which we believe will result in higher sales and revenue as the year progresses."

All told, adjusted (non-GAAP) net income soared 75% to $60 million, and non-GAAP earnings per share surged 57% to $1.65.

Image source: Getty Images.

Looking forward

These strong results prompted CoStar Group to boost its full-year financial outlook, which now includes:

Revenue of $1.174 billion to $1.19 billion, representing growth of 22% at the midpoint, and up from a prior estimate of $1.17 billion to $1.19 billion.

Adjusted EBITDA of $380 million to $390 million, up from $365 million to $375 million.

Non-GAAP EPS of $7.44 to $7.64, up from $7.01 to $7.21.

For the second quarter, CoStar Group expects revenue of $292 million to $295 million, adjusted EBITDA of $66 million to $70 million, and non-GAAP EPS of $1.25 to $1.34.

"With our continued strong sales and revenue performance and focus on margin improvement, we are raising our guidance for the full year of 2018," CFO Scott Wheeler said. "Our first quarter performance increases our confidence in achieving our goal of 40% adjusted EBITDA margin for the fourth quarter of 2018."

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